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The World Cup’s Impact on South Africa

I appreciate my sister, Chenae, asking me whether the World Cup will really help South Africa’s economy. My response to her question follows:

I worry about South Africa’s ability to maintain these huge stadiums it has built. They could drain resources. 50,000 people aren’t going to watch professional games on a regular basis. Another concern is that many of the jobs the World Cup has generated are temporary. While these temporary jobs help, South Africa needs a whole lot more permanent jobs to bring it’s unemployment rate down from 25 percent.

There is a lot of upside to the World Cup. South Africa is already Africa’s biggest economy, and the World Cup further bolsters its visibility. Venture capitalists and the like will be encouraged to restart the investment that raised Africa’s economic growth to 6 percent. South Africa could lead the way for renewed investments on the continent.

South Africa needs to be really aggressive about selling itself to foreign investors. It needs to prepare its people to leverage foreign investments in the country. A typical side effect of events like the Olympics and World Cup is a large group of displaced people. South Africa needs to push hard to make these people whole in any way possible: education, job training, etc. This is really important because the country has been experiencing a lot of xenophobia in the past year. A lot of immigrants have died in the past year, due to riots in which native South Africans have released their anger over job competition with immigrants.

I think that if South Africa can leverage the World Cup to attract foreign investment and to engage the lower class — native and immigrant, the country can see steady economic growth, and finally move firmly into classification as a developed country.